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The benefits of going 501(c)(3) from the news guy’s perspective

For more than 60 years, the organization has largely gone unchanged. It has staffed a volunteer board and a host of committees that are involved in everything from guiding the choices shopkeepers make when choosing signs to raising tens of thousands of dollars for neighborhood nonprofits through the Chestnut Hill Community Fund.

In the last five years, however, the board has shrunk considerably, from nearly 60 to less than 30.

And now there’s a fairly broad consensus behind changing the status of the organization from a simple nonprofit to a legitimate 501(c)(3).

The change makes a lot of sense for the organization. It will finally qualify to raise funds in a way it couldn’t before – from eligibility for major grants to being able to run local fund-raisers in which donors can give and still take a deduction on their income tax returns.

Prior discussions about the change have always raised concerns over preserving the association’s right to getting involved in influencing government – something that is prohibited for 501 (c)(3) organizations. The CHCA hasn’t developed the habit of lobbying government, so it gives up very little as a 501(c)(3).

But while the change for the association is a no-brainer, what it does with the Chestnut Hill Local is not nearly as obvious.

The Local, owned by the CHCA since its founding more than 50 years ago, operates like a regular business. It makes money, pays taxes, and so forth. It’s not likely that the paper would qualify to become a 501(c)(3). That status is reserved for charities that do public good. While the Local does it’s fair share of good, and sometimes the coverage we give does feel a lot like charity, the paper’s mission and business model is in line with that of a traditional news outlet. We put a paper together to inform and entertain, sell it in the open market via subscriptions and on newsstands, and sell ads to reach that market.

Which leaves the CHCA pondering how to organize and manage the Local if and when it does become a 501(c)(3).

While there is not a lot of precedent for charitable organizations owning newspapers, there are examples of nonprofits that run them. In New London, Conn., The Day is published by a Limited Liability Corporation that is owned by The Bodwein Public Benevolent Foundation, not a 501(c)(3), but a private trust that was established by the paper’s founder in 1938 to ensure the paper would remain true to its mission of public interest reporting.

The Poynter Institute, a nonprofit organization dedicated to journalism education founded by St. Petersberg Times owner Nelson Poynter in 1975, has maintained controlling stock in the paper since Poynter’s death in 1978.

The great thing about these arrangements is that both papers were sheltered from unrealistic expectations of Wall Street – the sort of expectations that have sunk whole newspaper companies – and have flourished by focusing on doing their jobs.

The Local has definitely enjoyed a similar benefit throughout its history. And there’s no reason to believe that anything will change if the CHCA changes its tax status.

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